Latin America’s economic story is usually told through its giants: Brazil’s agribusiness, Chile’s copper mines, Argentina’s lurching crises. Yet some of its fastest-growing economies are among its smallest.
The World Bank expects Panama, the Dominican Republic and Costa Rica to grow by an average of 4.1% this year, more than double the average of the region’s six largest economies.
New York-based financial giant Citi calls them the region’s “hummingbird” economies. But what is behind their success, and can they sustain their competitive streak?
Over the past decade, these small economies have narrowed the per-person income gap with the U.S. faster than their larger neighbors.
Since 1990, Latin America’s income per person has slipped from 28% of the U.S. to 26% in 2025, but over the same period, the hummingbirds have trended the other way. Panama rose from about a quarter of U.S. levels to nearly half, while Costa Rica and the Dominican Republic each gained more than ten percentage points.
If their most recent decade’s per-person growth rates hold, Citi projects all three will exceed 50% of U.S. living standards by 2060.
Their success owes less to what they dig up than to macroeconomic stability, capital inflows and competitive services and logistics.
Market-friendly structural reforms and institutional stability have paid dividends, enabling Costa Rica to expand its high-value services and manufacturing exports to a fifth of domestic GDP.
The Dominican Republic has deepened its own light manufacturing and tourism base alongside savvy currency management, and Panama continues to amplify its role as a regional trade hub.
Their respective growth models may be a test case for how Latin America can grow without the tailwinds of a commodity boom.
The hummingbirds have also proved resilient to global economic shocks. They grew without riding China’s commodity boom, as their larger regional counterparts did during the 2003-13 supercycle.
When prices slumped, they maintained 3.5% average growth between 2014 and 2019 even as the rest of the region slowed, according to IMF figures. With energy prices surging this year following the March closure of the Strait of Hormuz, their yearly growth projections improved despite being net energy importers.
Though resilient to global financial disruptions, the gravest threat to the hummingbirds might be a shock closer to home: their fortunes may be bound dangerously close to the strength of the U.S. economy.
Washington’s nearshoring push has emerged as the anchor of the hummingbirds’ momentum.
Costa Rica and the Dominican Republic export the majority of their services and high-tech manufactures to their northern neighbor, aided by free-trade agreements.
The Panama Canal provides a key logistics hub, and all three attract foreign direct investment above the regional average of 3% of GDP, mostly from the U.S.
A weak dollar and low commodity correlation have also kept exchange rates stable. “Their domestic policy is amplifying nearshoring trends in the Western Hemisphere with investment-friendly reform,” says Ernesto Revilla, chief economist for Latin America at Citi.
A slowdown in the U.S. economy, whether from a bursting AI bubble or a hike in interest rates, could stymie remittance and tourism dollars flowing in and exports flowing out.
Investors might swap risky emerging markets for juicier U.S. yields, and sustained high global energy prices would only benefit the region’s big oil producers, like Brazil or Argentina. “Their exposure to the U.S. cycle can only be managed, not eliminated,” said Revilla.
But for such small economies, Panama, Costa Rica and the Dominican Republic still punch well above their weight.
“These countries are undergoing an institutional transformation similar to their larger neighbors in previous decades,” says Maria Paula Carvajal, head of sovereign credit management for Latin America at Citi.
“The strength of their fiscal and monetary frameworks, the adoption of credible policies, and greater economic diversification are helping them turn cyclical opportunities into structural improvements,” she said.
And yet, however fast they beat their wings, the U.S. economy might be what ultimately keeps them aloft.
Featured image description: Rufous hummingbird (Selasphorus rufus), male, in flight.
Featured image credit: VJAnderson via Wikimedia Commons.
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